2nd UPDATE: Chicago Board Options Exchange Files For IPO

The parent of the Chicago Board Options Exchange on Thursday moved ahead with plans for a long-delayed initial public offering that could take place by June.

The world's fourth-largest derivatives exchange filed a prospectus with the U.S. Securities and Exchange Commission to raise up to $300 million, hiring Goldman Sachs Group Inc. (GS) as global coordinator.

The parallel demutualization and IPO of CBOE Holdings Inc. could also spark a bid battle for the prized exchange operator, which is expected to canvass its member-owners and vote on the management-backed plan next month.

The prospect of a payout helped drive up the value of the CBOE's 930 seats, with one selling for $2.95 million after a moratorium on trading was lifted earlier Thursday.

Seat prices--which topped $3 million apiece in 2008--have been rising in recent weeks, with one selling on Tuesday for $2.7 million.

The CBOE is the last large member-owned U.S. financial exchange, its trek toward the public markets delayed by a years-long legal battle that saw it miss out on a boom in exchange valuations--and a subsequent slide owing to the financial crisis.

Analysts have valued the franchise at between $3 billion and $5 billion, a price that hinges in part on whether a bid battle develops after an IPO.

The Chicago Board Of Trade and Nymex Holdings saw their share values double after their stockmarket listings before both were acquired by CME Group Inc. (CME), which is seen as a potential buyer of CBOE. IntercontinentalExchange Inc. (ICE) and NYSE Euronext (NYX) are also viewed by analysts as possible buyers.

Member-owners are expected to vote on the IPO plan within the next four to six weeks. They are being offered a $113.6 million special dividend after flotation to compensate for the loss of income from leasing their exchange access to traders.

"We will be meeting with our members in the coming days and months," said Chairman and CEO Bill Brodsky in a statement. "We will share more information with you as it's appropriate and permissible to do so." The exchange plans to retain the combined chairman and CEO role.

CBOE operates the largest U.S. options exchange as well as stock and futures platforms, and its value is boosted by a valuable franchise holding several exclusive licenses on options products, including the CBOE Volatility Index, or VIX, Wall Street's favorite "fear gauge."

The exchange revealed for the first time that the licenses accounted for 32% of its $314.5 million in transaction revenue last year.

It faces a legal challenge to its exclusive use of the licenses from rivals including the International Securities Exchange--a unit of Deutsche Borse AG (DB1.XE).

The CBOE is pursuing the demutualization after settling in December a long-running legal dispute over ownership rights in the exchange.

CBOE converted to a for-profit business in 2006 and early Thursday imposed a moratorium on sales of seats, which convey trading rights at the CBOE, until 10:00 a.m. CST as exchange executives discussed the regulatory filing with members.

The company reported net profit of $106.5 million on revenue of $426 million in 2009.

-By Jacob Bunge, Dow Jones Newswires; 312 750 4117; jacob.bunge@dowjones.com

(Doug Cameron and Nathan Becker contributed to this article)

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